During his keynote speech at QuakeCon 2010, id Software's John Carmack demonstrated Rage on the iPhone, running at 60 frames-per-second and able to "kill anything done on the Xbox or PlayStation 2."
Carmack's demonstration, using the id Tech 5 engine, could possibly be the most impressive tech we've seen on the iPhone. Running on the iPhone 4 but easily run on the 3GS, the visuals indeed rivaled anything from the PlayStation 2 and original Xbox, and might even be able to give a few current-gen titles a run for their money.
(UPDATE: Carmack later clarified that his impressive demo, shown here, is not running the full id Tech 5 engine; it is using its own tech that utilizes some of id Tech 5's elements, such as megatextures, but it's not the complete id-made engine that will be used the company's PC and console editions of Rage.)
The first Rage game for the iPhone will be a small "show-off" sort of title, with a larger game due out next year to coincide with the big game's release.
For more of Carmack, be sure to check out our liveblog of the QuakeCon 2010 keynote.